Scotts Plantations (Private) Limited vs The State of Karnataka, Department of Revenue and Others

Anand Byrareddy, J.—1. Heard the learned counsel for the petitioner and the learned Additional Advocate General.

It is the case of the petitioner that the land in survey No. 8 of Kuduragere Village, Dasanapura Hobli, Bangalore North Taluk, measuring 5 acres was notified for acquisition in terms of a notification dated 31.10.2006 by the Deputy Commissioner and at the auction held on 17.11.2006, the petitioner is said to have been the highest bidder and he had bid a sum of Rs. 3,88,00,000/-. The petitioner had remitted 25% of the bid amount in line with the terms and conditions of the auction and deposited a sum of Rs. 97,00,000/- on 18.11.2006.

It is claimed that by a further communication dated 11.1.2007, the State Government had confirmed the highest bid of the petitioner in respect of the land, which was said to be under Section 177 of the Karnataka Land Revenue Act, 1964 (Hereinafter referred to as the ''KLR Act'', for brevity). As per the intimation letter dated 4.2.2007, the petitioner was said to have been called upon to deposit the balance 75% of the bid amount within seven days. In response to which, the petitioner is said to have made a representation dated 10.2.2011, to contend that the land in question was within the ''green belt'' and that the petitioner was a company and non-agriculturist and since several similarly situated auction bidders had petitioned the Revenue Secretary requesting that there be change of land user in order to put the same to non-agricultural use by such bidders, it transpires that the Revenue Secretary by a letter dated 19.1.2009, had directed that payment of the balance amount of 75% of the bid amount may be paid to the Government only after the change of land user was effected. The petitioner sought to take advantage of the said direction issued in respect of other similarly placed auction bidders.

It is the petitioner''s case that several requests were made for change of land use. The petitioner has placed reliance on an order passed in a writ petition in WP 19126/2010 dated 28.6.2010, which was at the instance of an auction purchaser.

Since there was no progress in respect of the said change of land use even thereafter insofar as the petitioner was concerned, he had submitted a representation dated 22.9.2012 requesting the Deputy Commissioner to issue a notice to pay 75% of the bid amount in respect of the schedule land in order to enable the petitioner to make such payment. However, there was no response from the Deputy Commissioner. The petitioner had renewed its request by a further representation dated 31.12.2015. In response to the said representation, an endorsement was issued on the very same day that as per the letter dated 14.11.2013, directing the Deputy Commissioner to forfeit 25% of the bid amount, the Deputy Commissioner had by order dated 20.12.2013 forfeited 25% of the bid amount, in a sum of Rs. 97,00,000/- and hence there was no question of considering the petitioner''s representation to take the sale transaction forward.

The petitioner was unaware of the forfeiture and in the absence of any notice, the order of forfeiture having been passed, had requested for copies of the communication between the State Government and the Deputy Commissioner leading to the forfeiture. The copies of such communication having been furnished to the petitioner, it is the case of the petitioner that till such time the endorsement dated 31.12.2015 was issued, the petitioner remained unaware of any other proceedings having been taken, and it is only in retrospect that he has learnt of the actions of the State Government. Therefore, the present petition.

It is further pointed out that in similar circumstances, whereby the Deputy Commissioner had forfeited 25% of the bid amount in the case of yet another auction bidder, in a writ petition in WP 48067/2011, this court by its order dated 13.8.2013, had quashed the order of forfeiture and directed the Government to accept the balance 75% of the bid amount. That order had attained finality. Neither the State nor its officers had questioned the said order and on the contrary have implemented the order by accepting 75% of the bid amount and have also issued a sale certificate in favour of the petitioner therein and hence by parity of reasoning, the petitioner would claim that it ought to be granted the similar relief.

The State Government has entered appearance and has filed statement of objections. The learned Additional Advocate General Shri A.G. Shivanna would contend that the sequence of events as claimed by the petitioner are not entirely true and correct though there was an auction sale, as stated by the petitioner. Though the petitioner was the highest bidder and the petitioner also having remitted 25% of the bid amount on 18.11.2006, the petition is silent as to the several conditions which were stipulated in the auction notification. One of the conditions, namely, Condition No. 11 read with section 174 of the KLR Act was that the remaining 75% of the bid amount would have to be paid within the stipulated time after confirmation of the auction by the Government, failing which the initial bid amount would stand forfeited to the Government. The petitioner having participated in the auction was fully aware of the conditions stipulated and by way of a communication dated 11.1.2007, the auction sale in favour of the petitioner having been confirmed, the petitioner was called upon by an order dated 4.2.2007 by the Deputy Commissioner calling upon him to deposit 75% of the bid amount within seven days. This is admitted by the petitioner. The petitioner had failed to deposit the amount but had chosen to make a representation that the land was within the green belt area and that there should be change of land user before seeking the balance amount.

The petitioner''s contention that there was a requirement of changing the land user before calling upon the petitioner to pay the balance amount is not tenable. A similar contention was urged before the Division Bench of this court in WA 2713/2010 wherein it was pointed out by the learned Additional Advocate General that the bidder would be bound by the terms and conditions of the auction and it would not be possible for the bidder to read into the terms and conditions any additional terms and conditions as it were, in claiming that there was a pre-condition of the State Government changing the land user before conveying the land after receiving the balance bid amount. The conditions prescribed was that the auction sale would be on ''as is where is basis'' and this clearly implied that the land was being sold notwithstanding that it was within the green belt area and there was no such requirement of conversion of the land user before it could be conveyed. The petitioner had voluntarily participated at the auction notwithstanding such condition and therefore the petitioner is estopped from raising extraneous contentions, which would be outside the contract and hence, the learned Additional Advocate General would submit that reliance being placed on a communication by the Revenue Secretary would not alter the terms and conditions of the auction sale and that any such assurance would not bind the State Government in deciding in accordance with law when there was a default on the part of the petitioner to deposit the remaining bid amount of 75%.

In any event, it is pointed out that the Revenue Secretary having held out such assurances was specifically withdrawn by a letter dated 21.12.2011 and it is the letter calling upon the petitioner to pay the balance amount as in the year 2007 itself which was required to be complied with by the petitioner and hence, he petitioner admittedly having defaulted in making such payment, the forfeiture was in terms of the conditions of the auction sale and cannot now be assailed at this remote point of time.

Insofar as reliance sought to be placed in respect of a transaction involving the petitioner in WP 48067/2011 is concerned, that was clearly in a circumstance, where the petitioner therein had failed to make payment of the balance amount and had, however, sought to make payment and had paid the amount with minimal delay and therefore, the sale having been confirmed insofar as that petitioner at the instance of this court, could not apply to the facts and circumstances of the present case on hand, as admittedly, there is inordinate delay in the petitioner approaching this court and the petition would have to fail on the sole ground of delay and laches alone, without reference to any other contentions that may be advanced by the petitioner. The only alterative for the petitioner is to make payment and then seek conversion of the land if it is possible for any other use or seek permission to hold agricultural land even if he was not an agriculturist, on such terms and conditions as may have been imposed by the State Government. The learned Additional Advocate General, therefore, seeks that the petition be dismissed summarily as no vested right is available to the petitioner, by which he could challenge the order of forfeiture and seek conveyance of the property in its favour at this remote point of time.

By way of reply, the learned counsel for the petitioner would point out that it would be untenable for the State Government to contend that the State Government is not bound by the letter issued by the Revenue Secretary to the effect that insofar as the bidders such as the petitioner, who had sought to purchase agricultural lands at the auction, that the balance bid amount may be paid only after the land user was changed as not being valid decision and not binding the State Government. It is pointed out that if it did not bind the State Government, there was no need for the said communication to have been withdrawn subsequently by issuance of a separate letter and thereafter having called upon the petitioner to pay the balance amount as late as in the year 2011. Therefore, the contention that there is inordinate delay in the petitioner approaching this court is belied by the fact that though the auction sale was of the year 2006, the petitioner''s hope that change of land user would be made before the petitioner would be called upon to pay the balance amount held out to the petitioner till the year 2011. The same not having taken forward by the State Government cannot be placed at the door of the petitioner in contending that the petition is barred by delay and laches. The further contention that an order was made in favour of another bidder that the land was sold to the said bidder with a condition that till such time the land purchased by the said bidder was fenced, he was not required to make further payment of 75% and having withheld payment by the auction purchaser, on the footing that the State Government had failed to comply with the precondition, was the reason for the delay in non-payment in that case and it is only after the amount was forfeited, that there was challenge to the forfeiture in a writ petition and an order being passed in that writ petition, the said auction purchaser had made the payment. It is not correct on behalf of the State to contend that the auction purchaser therein had promptly paid the amount or with minimal delay. It is only after the advance amount paid was forfeited and there was refusal on the part of the State Government in conveying the property and only after a challenge was made to the action on the part of the State Government and it is only pursuant to the order of this court that payment had been made. Therefore, to place every bidder on a different footing would be unfair and denying the petitioner''s due. Therefore, the learned counsel submits that the petition be allowed as the State Government cannot play favorites with similarly placed auction bidders.

In the above circumstances of the case, it is to be noticed that neither under the KLR Act nor under the Karnataka Land Grant Rules, 1969, is there any provision to be found for the State Government to bring the land to sale by auction. Therefore, the several Rules which are sought to be relied upon by the State Government in claiming automatic forfeiture is not permissible.

Therefore, the State Government, which is the Chief Controlling Authority under the KLR Act in terms of Section 3 thereof, having thought it fit to bring the agricultural lands to sale by auction sale, was at its prerogative and in terms of the conditions that were imposed in the notifications issued in respect of the auction sale. The petitioner having participated at the auction and having been declared as the highest bidder had deposited a substantial sum of Rs. 97,00,000/- as 25% of the bid amount.

The further circumstance that several auction purchasers were non-agriculturists, who had bid at the auction and purchased agricultural lands were not entitled to hold agricultural lands as non-agriculturists which is contrary to law, not only for want of conversion under the KLR Act, but also under the provisions of the Karnataka Land Reforms Act, 1961. This necessarily entails the State Government make an order illegally by changing the land user, in order that it should be conveyed to a non-agriculturist. Therefore, there is reason and legality in the several bidders, including the petitioner raising a precondition that the land be converted for non-agricultural purpose before it is conveyed and before they are called upon to pay 75% of the bid amount. There is hence justification in the Revenue Secretary himself conveying to the bidders that they would be required to deposit 75% of the amount only after the land user was changed. This circumstance having kept the transaction in suspense for several years and the State Government in its wisdom having called upon the Revenue Secretary to withdraw his earlier letters in the year 2011 and thereafter, as learnt by the petitioner in retrospect, the petitioner having been called upon to pay the balance amount and on its failure to do so, having passed an order of forfeiture, was not to the knowledge of the petitioner. Therefore, the order of forfeiture could not be held against the petitioner.

It is admitted by the learned Additional Advocate General that there is no material on record to indicate that the petitioner has been served with a notice of order of forfeiture and therefore, it cannot be said that the order of forfeiture was binding on the petitioner. Hence, the petitioner''s claim that the land ought to have been converted for non-agricultural use before it can be conveyed in its favour and before it can be called upon to complete the transaction, is fully justified. Even today, the land cannot be conveyed to the petitioner as agricultural land, but since the land is in green belt and the land lying in such green belt area could be exempted from the rigour of non-conversion only in certain circumstances, the State Government could issue exemption under Section 109 of the Karnataka Land Reforms Act, 1961. Be that as it may. Insofar as the auction sale in favour of yet another bidder is concerned, since he had also not complied with the condition of payment of the balance bid amount on the State Government having failed to comply with the condition of fencing the property and identifying it by metes and bounds and initial bid amount paid having been forfeited admittedly had been challenged before this court in a writ petition in WP 48067/2011. It is only pursuant to the order of this court that the said bidder had paid the amount. The said auction sale was held in the year 2008 and the order of forfeiture was passed in that case in the year 2011 and it is only in the year 2013 that the said bidder had filed a petition before this court and the order was passed on 13.8.2013. It is thereafter the he had deposited the amount and a sale certificate was issued on 17.2.2014. Therefore, it cannot be said that the petition is barred by delay and laches insofar as the present petitioner is concerned, having regard to the sequence of events in the present case on hand. However, keeping in view that it is a public property that is being sold to the petitioner, it would be necessary to take into account the lapse of time and the escalation in price of land. For want of a measure as to the price that would have to be paid by the petitioner at this point of time it would be reasonable to direct the petitioner to enhance the price to be paid equivalent to the guidance value prescribed in respect of the said land which remains as agricultural. The prospect of the land being converted for non-agricultural use is what had prompted the petitioner to make a bid which was 300% or more of the guidance value at the time when he had bid at the auction.

It is however appropriate if the petitioner should pay the present guidance value of the property, which according to the learned counsel for the petitioner, is set at Rs. 80,00,000/- per acre. The extent of land that is being purchased is 5 acre and hence, the petitioner would be liable to pay a total sum of Rs. 4,00,00,000/-. The petitioner has deposited Rs. 2,91,000/- before this court, which the State may withdraw. The petitioner to deposit the remaining amount of Rs. 12,00,000/- (Rs. 3,88,00,000 - Rs. 4,00,00,000) within a period of one week and on payment of the same, the respondents would be obliged to complete the sale transaction and issue a Sale Certificate within two weeks thereafter if not earlier.

The petition is accordingly disposed of in terms as above. The impugned annexures are quashed.